Growth accounting

For the last 50 years, the world economy has benefited from a demographic boom that has contributed 1.8% to average annual global GDP increases, helping to generate an unprecedented level of growth.… But with populations ageing and fertility rates dropping worldwide, the growth rates of the last 50 years may prove to be the exception, not the rule.… Societies that fail to raise their game for the productivity needed to sustain growth will find it harder to achieve desirable goals, such as reducing poverty in developing economies and meeting social commitments in developed ones.

Among the countries we studied, fully 75% of the needed productivity increases through 2025 could occur if lagging companies and public-sector institutions caught up to the productivity of their best-performing peers. Emerging markets have the biggest opportunities, which represent a critical link in the virtuous cycle of emerging-market development: rising labour productivity goes hand in hand with growth in disposable income, consumption and GDP.

To close the gap, companies must seize the opportunity to accelerate productivity growth and the value-creation potential it holds, while governments will need to support them by assessing regulatory barriers to competition in product and labour markets… boosting productivity by rethinking regulatory barriers holds enormous potential for the global economy.